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Stocks, Futures Waver Before Jobs Data; Oil Climbs: Markets Wrap

By Robert Brand

Stocks extended their weekly losses, with traders assessing a mixed jobs report against prospects for Federal Reserve’s monetary policy.

Technology shares led declines in the S&P 500, while the Nasdaq 100 underperformed. China’s companies listed in the U.S. tumbled amid ride-hailing giant Didi Global Inc.’s preparations to withdraw from American exchanges and the Securities and Exchange Commission’s plan to force foreign companies to open their books to scrutiny or risk delisting. Facebook parent Meta Platforms Inc. plunged 20% from its September peak, with shares set to a enter bear market. The dollar rose.

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Photo by Adeolu Eletu on Unsplash

Data showed U.S. payrolls had the smallest gain this year in November, while the unemployment rate fell by more than forecast to 4.2%. Despite mixed readings on the labor-market recovery, several economists and analysts said the report wouldn’t necessarily be considered a game changer, with policy makers likely to follow through with a faster tapering of asset purchases.

Volatility across assets remains elevated, reflecting the Fed’s shift toward less generous monetary settings and uncertainty about how the omicron coronavirus outbreak will affect the global reopening. Fed Chair Jerome Powell told lawmakers this week that officials should consider speeding up the taper of bond buying at their December meeting to wrap it up a few months earlier than initially planned. A faster taper was backed by several other officials this week.

Comments:

  • “Today’s non-farm payroll report looks messy to me. Best to wait for the revisions next month before sounding the stagflation alarm too loudly. And, if you think this is report will push back the accelerated taper mentioned by Fed Chairman Jerome Powell this week, you would be mistaken,” said Jamie Cox, managing partner for Harris Financial Group.
  • “This is a reminder of the uncertainty on the pace of the jobs recovery. It will give the Federal Reserve pause as it considers accelerating its monetary policy tightening at its December 14-15 meeting. A slower pace would be welcomed by markets,” said Ben Laidler, global markets strategist at multi-asset investment platform eToro.
  • “Markets have a lot to digest as the economy is strong, but the labor market is reaching its full potential and inflationary forces are already elevated, which is why the Fed is feeling more urgency to complete their tapering early,” said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance.

The U.S. Treasury again stopped short of labeling any foreign economies as manipulators of their exchange rates, while continuing to say that Taiwan and Vietnam met all three criteria for the designation. Switzerland dropped off the list, last published in April, of countries exceeding the three thresholds, with officials saying it violated two of the criteria while narrowly missing a third.

The Fed’s march toward higher rates presents greater risk for stock investors, and the likelihood of a correction in the S&P 500 next year is “elevated,” according to Bank of America’s Savita Subramanian.

“We are in an environment where the dividend yield on the S&P 500 is below where cash yields are likely to be in a year or two,” the strategist told Bloomberg TV.

Some of the main moves in markets:

Stocks

  • The S&P 500 fell 1% as of 11:03 a.m. New York time
  • The Nasdaq 100 fell 1.8%
  • The Dow Jones Industrial Average fell 0.6%
  • The Stoxx Europe 600 fell 0.6%
  • The MSCI World index fell 0.9%

Currencies

  • The Bloomberg Dollar Spot Index rose 0.3%
  • The euro fell 0.2% to $1.1278
  • The British pound fell 0.6% to $1.3219
  • The Japanese yen was little changed at 113.22 per dollar

Bonds

  • The yield on 10-year Treasuries declined three basis points to 1.42%
  • Germany’s 10-year yield was little changed at -0.37%
  • Britain’s 10-year yield declined three basis points to 0.78%

Commodities

  • West Texas Intermediate crude rose 2.6% to $68.25 a barrel
  • Gold futures rose 0.5% to $1,771.30 an ounce

More stories like this are available on bloomberg.com

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